JAMES Hird has failed in his Federal Court appeal to have the joint AFL-ASADA investigation into Essendon's 2012 supplements program declared unlawful.
Federal Court Justice Susan Kenny delivered the unanimous judgment on Friday.
Justice Kenny said there was nothing unlawful in using the AFL's powers to assist ASADA in its investigation against Essendon's supplements program.
Hird, who afl.com.au understands is overseas while the Bombers players are on a short break, was also ordered by the Federal Court to pay all legal costs.
When contacted by AFL.com.au one legal source estimated the legal costs to be at least $500,000.
Hird has 28 days to lodge an appeal in the High Court if he chooses to continue his legal challenge to the joint investigation.
ASADA released a statement shortly after the verdict was delivered on Friday saying it had been vindicated for working with the AFL to uphold a clean competition.
"ASADA and sports must partner if we are to have any chance in protecting the integrity of fair competition," the statement read.
CEO Ben McDevitt said the anti-doping body would remain vigilant in its work to "protect the health of athletes and their right to compete against clean athletes".
Friday's decision means the Anti-Doping Tribunal hearing in relation to infraction notices issued to 34 past and present Essendon players and one former employee of the club will proceed according to a timetable released on Thursday.
The tribunal will be adjourned on February 18 for members to consider their decision as to whether anyone issued with infraction notices breached the anti-doping code.
If anyone is found to have breached the code a hearing will then be set to determine what sanctions are applied to the parties.
Hird lodged the appeal against Justice John Middleton's Federal Court decision in October after Justice Middleton found in September all parts of the ASADA investigation were lawful, including the provision of the interim report to the AFL.
Essendon did not support Hird's decision to appeal and discussed his future at the club.
However the Bombers have since re-affirmed their commitment to Hird being senior coach for the next two seasons.
In an open letter to members posted on the club's website, Essendon Chairman Paul Little said that Hird was disappointed with the court's decision but would continue to focus on his job.
"We look forward to James continuing to focus on preparing our players for the upcoming season and building on the great work he has done over the last four months," Little said.
Little said it was unfortunate the Anti-Doping Tribunal process was taking longer than the club initially anticipated but any suggestion Essendon would not participate in the NAB Challenge series was premature.
The Bombers are due to play their first game on March 7, when they are scheduled to meet St Kilda at Morwell.
"As it stands, our players who have been issued with infraction notices can have their provisional suspensions lifted at the discretion of the AFL Commission. However, it is unclear if this would impact the ability of a player to use this time against a potential sanction in the event of a guilty finding," Little said.
"We hope to have clarity on this complicated and unprecedented matter in the coming weeks and are working closely with all of the relevant parties to ensure we reach a satisfactory outcome for our players as quickly as possible."
Essendon's premiership season kicks off on April 4 when it is scheduled to play the Sydney Swans at ANZ Stadium.